SMTP, Inc. Reports Third Quarter 2015 Financial Results

Published 8:30 AM ET Wed, 4 Nov 2015
Globe Newswire

GAINESVILLE, Fla., Nov. 4, 2015 (GLOBE NEWSWIRE) -- SMTP, Inc. (NASDAQ:SMTP), a global provider of cloud-based email marketing technologies, today reported its financial results for the third quarter ended September 30, 2015. Additionally, the company announced it will rename the company "SharpSpring, Inc." as of December 1 and will begin trading using the ticker "SHSP" on the same date.

Third Quarter Financial Highlights

Revenues for the third quarter 2015 were $3.74 million, a 129% increase, compared to $1.63 million for the third quarter 2014;

Revenues for our SharpSpring product were $1.25 million during the third quarter 2015, showing strong sequential growth from $1.0 million reported in the second quarter;

Gross profit for the third quarter 2015 was $2.71 million, or 73% of revenue, compared to $1.29 million, or 79% of revenue, for the third quarter of 2014;

Net loss for the third quarter 2015 was $1.29 million, compared to a net loss of $0.10 million for the same period last year;

The net loss in the third quarter of 2015 included acquisition-related charges of $0.27 million, restructuring charges of $0.46 million, amortization of intangible assets of $0.38 million, and stock compensation of $0.22 million, compared to acquisition-related charges of $0.37 million, amortization of intangible assets of $0.03 million, and stock compensation of $0.17 million in the third quarter of 2014;

Adjusted EBITDA was a loss of $0.22 million during the third quarter of 2015; and

Core net loss was $0.26 million, or $0.04 core loss per share, for the third quarter of 2015. Core results exclude acquisition-related costs, stock compensation expenses and restructuring expenses, and are adjusted for taxes, as detailed in the reconciliation below.

Recent Operational Highlights

Named Rick Carlson as Chief Executive Officer, reflecting the company's focus on driving growth of its SharpSpring product and focus on the marketing automation sector;

Added 188 new SharpSpring customers, representing over $1.3 million in new annual recurring revenue to the SharpSpring platform during Q3;

Launched the SharpSpring media center, allowing users to manage, send and track click-throughs for marketing and sales materials in one convenient place;

Completed a financing raising $3.4 million, net of expenses, to provide growth capital and stability to the company's balance sheet;

Achieved the initial target of having $5 million of revenue under contract for SharpSpring by the end of 2015, which is five times the level of revenue under contract at the time SharpSpring was acquired in August 2014;

Grew the SharpSpring agency customer base to over 580 agencies utilizing and reselling SharpSpring by the end of Q3; and

Announced the availability of SharpSpring mobile and the SharpSpring Social Assistant, allowing users to work with their pipeline, leads, opportunities, contacts and campaigns from anywhere, and see informative contact profiles instantly as they surf LinkedIn, Twitter, Gmail and Facebook.

"We continued to see strong revenue growth for our SharpSpring marketing automation solution during Q3 and we are excited to report that we exceeded the initial 2015 target we set for the business of having $5 million of annual revenues with more than a quarter to spare," said Rick Carlson, CEO of SMTP. "While GraphicMail growth in the third quarter was tempered by headwinds from foreign exchange rate fluctuation and seasonality in both the US and Europe, we continue to be excited about the business and look forward to continued growth in Q4."

Investor Conference Call

SMTP CEO Rick Carlson and CFO Edward Lawton will host the conference call, followed by a question and answer period.

Date:

Wednesday, November 4

Time:

9:00 a.m. Eastern time (6:00 a.m. Pacific time)

Toll-free dial-in number:

1-888-438-5525

International dial-in number:

1-719-325-2281

Conference ID:

4530810

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through November 25.

Toll-free replay number:

1-877-870-5176

International replay number:

1-858-384-5517

Replay ID:

4530810

Non-GAAP Financial Measures

Adjusted EBITDA, Core net loss and core net loss per share are "non-GAAP financial measures" presented as supplemental measures of the company's performance. These metrics are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The company believes these measures provide additional meaningful information in evaluating its performance over time. However, the measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of the company's results as reported under GAAP. A reconciliation of net income (loss) to these measures is included for your reference in the financial section of this earnings press release.

About SMTP, Inc.

SMTP, Inc. (NASDAQ:SMTP) is a global provider of cloud-based marketing solutions ranging from sophisticated marketing automation (via subsidiary SharpSpring) to comprehensive email and mobile marketing (via subsidiary GraphicMail) and scalable, cost-effective email deliverability services. The company's product family is hallmarked by its flexible architecture, ease-of-use and cost-effectiveness. SMTP augments its technology with high-quality, multilingual customer service and support. SMTP, Inc. is headquartered in Gainesville, FL, and can be found on the web at www.smtp.com.

Safe Harbor Statement

The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continues," "estimates," "projects," "intends," and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, but are not limited to, general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing new customer offerings, changes in customer order patterns, changes in customer offering mix, continued success in technological advances and delivering technological innovations, delays due to issues with outsourced service providers, those events and factors described by us in Item 1.A "Risk Factors" in our most recent Form 10-K and other risks to which our Company is subject, and various other factors beyond the Company's control.

Note: Financial Schedules Attached

SMTP, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Revenue

$ 3,742,312

$ 1,631,244

$ 10,619,368

$ 4,602,068

Cost of services

1,027,442

340,649

2,742,691

1,019,032

Gross profit

2,714,870

1,290,595

7,876,677

3,583,036

Operating expenses:

Sales and marketing

1,529,054

380,172

4,216,254

776,485

Research and development

530,163

141,923

1,538,528

361,932

General and administrative

1,609,753

973,016

3,766,036

2,020,617

Change in earn out liability

270,065

--

2,641,397

--

Intangible asset amortization

379,053

25,667

1,140,627

25,667

Total operating expenses

4,318,088

1,520,778

13,302,842

3,184,701

Operating income (loss)

(1,603,218)

(230,183)

(5,426,165)

398,335

Total other income (expense)

(64,681)

(9,805)

(130,328)

(9,651)

Income (loss) before income taxes

(1,667,899)

(239,988)

(5,556,493)

388,684

Provision (benefit) for income tax

(378,862)

(142,160)

(1,230,777)

111,972

Net income (loss)

$ (1,289,037)

$ (97,828)

$ (4,325,716)

$ 276,712

Net income (loss) per share

Basic

$ (0.19)

$ (0.02)

$ (0.71)

$ 0.06

Diluted

$ (0.19)

$ (0.02)

$ (0.71)

$ 0.06

Weighted average common shares outstanding

Basic

6,858,407

5,020,005

6,062,196

4,761,469

Diluted

6,858,407

5,020,005

6,062,196

4,814,774

SMTP, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

December 31,

2015

2014

Assets

Cash and cash equivalents

$ 4,480,086

$ 2,825,520

Accounts receivable

622,845

393,922

Deferred income taxes

240,622

240,648

Income taxes receivable

1,625,736

328,807

Other current assets

336,274

197,719

Total current assets

7,305,563

3,986,616

Property and equipment, net

562,182

281,555

Goodwill

8,893,508

8,901,106

Intangibles, net

6,688,826

7,895,238

Deferred income taxes

612,941

612,941

Deposits

21,809

30,172

Total assets

$ 24,084,829

$ 21,707,628

Liabilities and Shareholders' Equity

Accounts payable

$ 469,460

$ 397,262

Accrued expenses and other current liabilities

361,341

355,796

Deferred revenue

867,112

1,006,031

Earn out liabilities

5,291,544

--

Income taxes payable

12,212

14,622

Deferred income taxes

7,658

2,119

Total current liabilities

7,009,327

1,775,830

Earn out liabilities

--

7,679,311

Total liabilities

7,009,327

9,455,141

Shareholders' equity:

Preferred stock, $0.001 par value

--

--

Common stock, $0.001 par value

7,221

5,447

Additional paid in capital

22,370,144

13,248,992

Accumulated other comprehensive income (loss)

(151,954)

(177,767)

Accumulated deficit

(5,149,909)

(824,185)

Total shareholders' equity

17,075,502

12,252,487

Total liabilities and shareholders' equity

$ 24,084,829

$ 21,707,628

SMTP, Inc.

RECONCILIATION TO ADJUSTED EBITDA

(Unaudited, in Thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net income (loss)

$ (1,289)

$ (98)

$ (4,326)

$ 276

Provision (benefit) for income tax

(379)

(142)

(1,231)

112

Other (income) expense, net

65

10

130

10

Depreciation & amortization

429

57

1,284

117

Non-cash stock compensation

222

166

657

453

Acquisition related charges

270

367

2,689

410

Restructuring charges

459

--

504

--

Adjusted EBITDA

$ (223)

$ 360

$ (293)

$ 1,378

SMTP, Inc.

RECONCILIATION TO CORE NET INCOME (LOSS) AND CORE EARNINGS (LOSS) PER SHARE